Finally rolling out construction loans in Q4.

I can't find what happens if a consumer can't complete construction and an extension needs to be done.

For instance, initial construction period is 12 months and construction is. It complete. A modification to the existing note is done and the product team wants to be able to extend six months and charge a fee (1/2 basis point)

Can this be done? If so, how??

I understand there will be an addendum for post consummation fees under the new rule.. but doesn't help us now and I doubt our LOS will have the addendum available by q4 as the mandatory date isn't until October 2018.

Any help or guidance would be greatly appreciated. Thank you.

We prepare a lot of interim construction loans and, frequently, due to contractor/weather issues they extend over the 12 months timeframe. We prepare a change in terms agreement extending for an additional 90 days; we only allow 2 of these. If there is more time needed, we do a brand new TRID loan (refinance). But, for the change in terms, we do charge a loan fee; no new disclosures required for the modifications. Only the maturity changes.....no other terms.

Thank you crcmnot. I saw a number of threads where RLCarey said that it was a contract issue and whether you could do it or not was a matter of what the contract stated and state law allowed. I'm just freaked out because it throws your entire Le/cd out.. apr changes, air table changes.... totally different.

Are we safe to extend without consequence through a CIT without redisclosing anything? (Until the new addendum is used/effective)?

Thank you!

I'm just freaked out because it throws your entire Le/cd out.. apr changes, air table changes.... totally different.

A modification is a subsequent event and has no effect on your original disclosures nor do they require new disclosures. As long as your modification/extension agreement contracts for the modification/extension fee, and if state law allows it, you should be fine.

As a word of caution just be sure your legal counsel reviews and approves your modification/extension agreement

^^^ What Dan and Randy (in the other threads) state. Our loan agreement & notes do allow for extensions, renewals, modifications, etc. It all boils down to reading the loan documents.

Thank you all for the feedback!! Appreciate your guidance!!